If this is your first visit, be sure to
check out the FAQ by clicking the
link above. You may have to register
before you can post: click the register link above to proceed. To start viewing messages,
select the forum that you want to visit from the selection below.

Legalities of selling products to other companies

03-16-2010, 09:53 PM

Hey guys, Im curious what you guys think of this idea.

I'm considering the possibility of marketing some of my projects to other companies that I do business with.

For example I'm developing a mechanism to open, sort and stack certain chemical containers when they are mixing chemicals to service a gas well.
All the design work, fabrication and testing is done by my shop however the company that this device is for is paying for the prototype costs.
They have merely given me the concept of the device and the parameters with which they expect the device to operate in.

Is it legal for me to try to sell the finished product to other companies?
Is there intellectual or other copyrights protecting the original client from me doing this?
If so, how do I go about obtaining legal rights over the products that I build and develop?
Do you guys think there is an ethical issue with me marketing a developed product to other companies?

Thats a tough one but i would say no you cant sell them. The company i work for shut down one of my ideas real quick reminding me of the paper i signed when i started there that "everything" in my head is owned by them 24/7 Boy i hope they don't want some of their thoughts back
I even tried to sell a tool idea to a company who's parts we used and they sent me a nasty letter that pretty much ends if anything here is not clear to call them back. I still have a copy of it hanging in my shop. Just my .02...Bob

Comment

I'd have to agree with Bob on this one.
Especially since they're paying you for the prototype.
But I'm a welder not a lawyer, with a project like that it might pay to get some legal advice before you worry too much about it.

Comment

Thanks for your replies, its been a concern for me as I started considering the opportunity this product is presenting. Especially since they are paying for the prototyping of the device.

However I just remembered a case in which the reverse happened to me. Where I designed a system of storage to attach on a piece of equipment. With my drawn plans (which i never charged for ) in their records and a initial product delivered to them, they proceeded to have their own 'fab shop' copy it for all their new units.

I was also asked once to bid against the designer of another piece of storage device in order to retrofit all the units located in my area, I was provided with the drawings of his design and a price to beat/match.

This is kind of telling me that they at least consider the very idea of anything built for them 'theirs'.

The thing is, I've never signed any contract with them stating anything about ownership rights for products or ideas conceaved via our relationship.

I'm almost tempted to draft up some sort of contract for this very reason, because I would rather they NOT own some of my ideas, especially the ones that I do not charge design time for.

There are other simpler ideas I've come up with that could possibly be used by others in any industry, a more efficient tire chain wrench for instance. Would you say that even a simple device such as a specialty wrench should be kept proprietary to the original requesting party even though all they provided me was a concept to work from?

Comment

Could you just talk with your client about your idea of marketing the product?

I've worked on design projects that I couldn't tell people what I was working on. Plant manager, master engineer, head designer and designer were the only ones who knew what the project was in the beginning. Even had 3M computer monitors that only allowed the screen to be seen from directly in front of it. I was told in no uncertain that if I told anyone I would be fired immediately.

I also had a design "stolen" from another company I worked for. Designed and fabbed a machine for them. To me it wasn't a nuclear rocket or anything but they were all oohs and ahhs. Few months later their central engineering brought in a machine almost identical that was fabbed by one of their "preferred vendors". They came in and reverse engineered the one I built.

Thing is, if they would have just asked I would have provided them all the drawings and material lists and saved them all the trouble. Pretty sure some engineer went to a big meeting and claimed all the design credit for himself. Even that I didn't care about since I'd been paid for the original design. Wasn't a big deal to me but they, for some reason, thought they had to do it back door.

Was it legal? Who knows. I avoid lawyers at all costs whenever possible. But most times you can keep the lawyers hungry if you just talk with somebody.

Comment

The way I see it, if you came up with the design, fabricated it yourself and the only thing that they had to do with it was coming up with the original concept of it, it's your baby. Put a patent on it before you turn it over to them. They might be paying you but they are paying you for DELIVERY of the final product, not the DEVELOPMENT of that product. That would be like one of us calling up Miller and saying that we want a device that fuses wire together that will allow us to run wire through a feeder continuously when changing spools. Even if we paid for one in advance, they designed it so they own the rights to it. But like I said, this is just the way I see it.

Comment

If you have not signed a contract stating that the product you manufacture is their property, you are legally able to sell it to others. By doing so, you may endanger the original relationship and you may not want to risk that.

In the future you may want to apply for provisional patent on items/tools you produce. You would also be wise to have a standard contract that states you own the manufacturing rights to any products developed during the contract period.

Comment

The contract/PO/agreement... whatever you have from them is binding.
If they are paying for and will retain all engineering docs/prints and so forth.
It's theirs. Also a Non Disclosure Agreement, your done.

If they are not explicitly paying for the engineering just the product, you have a "chance" to claim it for yourself and sell it.

Always best to take everything to a contracts lawyer, donate to his bank account and make sure. Make him sign a confidentiality and Non Disclosure Agreement before you show him anything.

If you need a copy of a standard NDA for your files or any of you for that matter, PM me and I will send you a copy in pdf format.

Comment

Thats a tough one but i would say no you cant sell them. The company i work for shut down one of my ideas real quick reminding me of the paper i signed when i started there that "everything" in my head is owned by them 24/7 Boy i hope they don't want some of their thoughts back
I even tried to sell a tool idea to a company who's parts we used and they sent me a nasty letter that pretty much ends if anything here is not clear to call them back. I still have a copy of it hanging in my shop. Just my .02...Bob

I haven't had a job that stopped the hiring process when I crossed that out and initialed it. My position was it was a deal breaker. We weren't going there.

As for the original question, the work was done at the request of another company and they're paying for the prototype work. They own it unless they give you a waiver to produce and market the product. If on the other hand they had presented a problem and then you had developed and produced a solution on your nickel then it's yours to market and produce.

Just my two cents.

Of course I'm a nut on intellectual property. I was just given a letter of allowance and have paid the fees for publishing and awarding a patent. I should have the patent in hand within a couple of months at the most.

Comment

If you have not signed a contract stating that the product you manufacture is their property, you are legally able to sell it to others. By doing so, you may endanger the original relationship and you may not want to risk that.

In the future you may want to apply for provisional patent on items/tools you produce. You would also be wise to have a standard contract that states you own the manufacturing rights to any products developed during the contract period.

The problem with that attitude is it's a small world. If clients find out it has to be in writing to be confidential with you then you'll either be not trusted or have to sign a contract anytime you do work for them.

I would want that to be a doggone important mountain to fight over before I went there myself.

Comment

The way I see it, if you came up with the design, fabricated it yourself and the only thing that they had to do with it was coming up with the original concept of it, it's your baby. [b]Put a patent on it before you turn it over to them.[/p] They might be paying you but they are paying you for DELIVERY of the final product, not the DEVELOPMENT of that product. That would be like one of us calling up Miller and saying that we want a device that fuses wire together that will allow us to run wire through a feeder continuously when changing spools. Even if we paid for one in advance, they designed it so they own the rights to it. But like I said, this is just the way I see it.

Obviously you haven't been to patent land lately. I've been involved with one patent that turned into two for almost four years and twenty three thousand dollars now. I was just given a letter of allowance (the patent's mine after fees are paid, done, and it's published) on one and am expecting the second one on the same product this year, patent gawd willing.

I'm trying right now to put together an entity to patent something else. We're looking at a lot of money and probably five patents to get it done. A lot of money is in the quarter of million dollars range.

Comment

I'm considering the possibility of marketing some of my projects to other companies that I do business with.

For example I'm developing a mechanism to open, sort and stack certain chemical containers when they are mixing chemicals to service a gas well.
All the design work, fabrication and testing is done by my shop however the company that this device is for is paying for the prototype costs.
They have merely given me the concept of the device and the parameters with which they expect the device to operate in.

Is it legal for me to try to sell the finished product to other companies?
Is there intellectual or other copyrights protecting the original client from me doing this?
If so, how do I go about obtaining legal rights over the products that I build and develop?
Do you guys think there is an ethical issue with me marketing a developed product to other companies?

I don't know what your relationship is with your clients. But it sounds like you're a go to guy for them. Since it's a fifty fifty proposition, they provide problems and you provide solutions, then I believe you should approach them with a fifty fifty concept on manufacturing and marketing. You might find yourself a long term gold mine, mailbox money for a long time to come, and share the risk while you're at it.

Comment

Thanks for the replies guys. Especially wroughtn's perspective as a patent holder.

Well, I decided to deliver the 2 prototypes that I finished yesterday for final testing by the guys who will be using it. After playing around with the machine a bit, the first thing out of the manager's mouth was " you need to patent that"
So we talked about that very thing, and as far as this manager was concerned I completely owned the idea of the machine and they were happy to simply have a working copy to save them the manual backache of doing the task by hand. I even mentioned selling this product to their direct competitors which he thought would be fine.

Today was an exciting day, I'm taking several detailed pictures of it tommorow and redoing my drawings on it to at least make it easier for me to reproduce it without much trouble.

How much does it cost to patent something harv? I think I might pursue that avenue if other companies show interest in this device.

Comment

Thanks for the replies guys. Especially wroughtn's perspective as a patent holder.

Well, I decided to deliver the 2 prototypes that I finished yesterday for final testing by the guys who will be using it. After playing around with the machine a bit, the first thing out of the manager's mouth was " you need to patent that"
So we talked about that very thing, and as far as this manager was concerned I completely owned the idea of the machine and they were happy to simply have a working copy to save them the manual backache of doing the task by hand. I even mentioned selling this product to their direct competitors which he thought would be fine.

Today was an exciting day, I'm taking several detailed pictures of it tommorow and redoing my drawings on it to at least make it easier for me to reproduce it without much trouble.

How much does it cost to patent something harv? I think I might pursue that avenue if other companies show interest in this device.

It's expensive.

You can do it yourself if you're really sharp and have lots of time, especially internet savvy kind of time.

But the whole thing about a patent is it's license to litigate. That's because no one but the patent holder has the right to enforce the patent. The sheriff isn't interested and no one cares but the patent holder. So what the patent does is give the person holding the patent the right to take anyone that infringes upon that patent to court to enforce the patent. That's on your nickel, you pay for the attorney to sue and hopefully you will prevail and they will stop infringing upon your patent and pay you enough to make it worthwhile suing them to stop.

So first and foremost a patent is about lawyers. Get over it. Live with it and hopefully profit from it. Get a good intellectual law firm and give them money when they ask for it and hold on for the ride.

It's also a game sorry to say. The first thing the patent examiners do is say no. They say no for the stupidest of reasons and they do it often and oftener. Everytime they say no the tab goes up because you have to pay for an appeal and for your attorney to come up with and file the appeal.

A simple thing can get done with few problems for fifteen to twenty thousand dollars. Anything more complicated can go a lot more than that. And something to keep in mind is someone can have patented a machine that operates a lot like yours and does something completely unrelated. Their patent attorney can see your application and then you've got to pay them for infringing or stop producing, maybe both.

That's why the best thing you can do is to go to the official uspto (united states patent and trademark office) and do a search for your idea. It takes a little practice and you've got to put in a ton of different terms but you can do a basic patent search yourself. If you've asked the question everyway you think possible and nothings like your idea then you can take it to an intellectucal property attorney and let them go after it.

A couple of don'ts.

1. Don't try to do it yourself. That's because you're dealing with patent people who speak patentese. If you don't speak the lingo then you're not going to understand what's being said. The other thing is it's about suing. If you do it on your own you're putting up a billboard that says you can't afford a good defense of your patent if you got one. That tells an infringer that they can infringe with impunity because it's a war and you don't have an army.

2. The only thing worse than doing it yourself is falling for one of the inventor's help sites you see advertised in the newspapers and on the television. They're not in the business of helping inventors. They're in the business of profiting off of the dreams of inventors. And when that good idea comes across their plate the inventor ends up with the smallest piece of the pie he could ever get and still be the inventor.

3. It takes time. The one I just got the letter of allowance for was originally filled in 2006. The first objection from the patent office involved too many claims, we had twenty, they wanted two applications, ten claims each, twice the fees, make sense? So we divided it up between method and structure. That was 2008. We've been given the letter of allowance for structure and the questions and compromises look real good for for method this year, again, twice the fees.